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Federal Jury Finds That Employer Not Liable For Failing To Provide "Easy Access" To Wage Statements

This week, in Guillen v. Dollar Tree Stores Inc., (15-CV3813) a federal jury found that Dollar Tree was not liable for how it provided wage statements to those employees who received their pay via direct deposit. Although Plaintiffs conceded that the wage statements provided all of the information required by California Labor Code Section 226(a) and were, therefore, compliant they nevertheless alleged that Dollar Tree violated Section 226(a) because it didn’t provide easy access to those employees who used direct deposit as the Company required them to use the store’s cash register printers in order to make physical copies of their pay stubs. (For those of you wondering, Labor Code Section 226 does not require “easy access” to pay stubs, although a 2006 DLSE Opinion Letter provided that electronic wage statements are permissible “so long as each employee retains the right to elect to receive a written pay stub or record and those who are provided with electronic wage statements retain the ability to easily access the information and convert the electronic statements into hard copies at no expense to the employee.”)

Even though it only took the jury approximately one hour to determine that Dollar Tree’s policy did not violate the Labor Code, the case provides a valuable reminder that “defective” wage statement class actions are alive and well and that plaintiffs are willing to file such claims for the most technical of “violations” or – as was the case in Dollar Tree – for no real violation at all. Accordingly, employers should review their wage statements to ensure that they are in compliance with Section 226(a) and that their wages statements provide: (1) gross wages earned; (2) total hours worked by non-exempt employees; (3) the number of piece-rate units earned and any applicable piece-rate if the employee is paid on a piece-rate basis; (4) all deductions; (5) net wages earned; (6) the inclusive dates of the period for which the employee is paid; (7) the name of the employee and only the last four digits of his or her social security number or an employee identification number; (8) the name and address of the legal entity that is the employer; and (9) all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee.

It is crucial that employers are in compliance with these requirements as Section 226(e) provides that an employee “suffering injury as a result of a knowing and intentional failure” to comply with Section 226(a) is entitled to up to $4,000 in penalties depending on the number of non-compliant wage statements. To make matters worse, the California Legislature made clear that an employee suffers “injury” if the employer fails to provide any of the nine pieces of information set forth in Section 226(a) and, therefore, it is extremely difficult for employers to offer up any defense for even the most technical of wage statement violations.

California Joins A Growing Number Of States And Cities In An Attempt To Remedy Wage Disparities

Governor Brown also recently signed A.B. 168, which adds Section 432.3 to the Labor Code as of January 1, 2018.

Labor Code Section 432.3 prohibits employers from: (i) relying on the salary history information of an applicant for employment as a factor in determining whether to offer employment to an applicant or what salary to offer an applicant; and (ii) seeking the salary history information – including compensation and benefits – about an applicant for employment. In addition, the newly enacted Labor Code Section requires employers to provide the pay scale for the position for which the applicant is applying upon “reasonable request.”

Labor Code Section 432.3 does not, however, prohibit an applicant from “voluntarily and without prompting” disclosing salary history information to a prospective employer. Under such circumstances, the employer many consider the voluntarily disclosed salary information in “determining the salary for the applicant.” As a result, even if an applicant voluntarily discloses their salary history information, an employer cannot use such information in determining whether to extend an offer of employment in the first place.

California joins Massachusetts, New York City, and Puerto Rico in banning salary history inquiries during the hiring process and several other cities and states are considering similar legislation. Advocates of banning the use of salary information believe it will help remedy pay disparities for women and minorities as using salary history as a factor in setting compensation with a new employer perpetuates wage disparities.

As many of you know, employers in California that have more than 50 employees are required to provide at least two hours of classroom or “other effective interactive training and education” regarding sexual harassment to all supervisory employees in California within six months of their assumption of a supervisory position. In addition, employers that are required to provide harassment training to their supervisory employees must do so at least once every two years. (Government Code Section 12950.1(a)).

Last week, Governor Brown extended these training requirements and – starting January 1, 2018 – employers “shall also provide training inclusive of harassment based on gender identity, gender expressions, and sexual orientation” as a component of the training and education already required pursuant to Government Code Section 12950.1(a). Similar to the current requirements, harassment training on these subjects must include “practical examples inclusive of harassment based on gender identity, gender expression, and sexual orientation” and shall be presented by trainers or educators with knowledge and expertise in those areas.

Accordingly, employers should carefully review their harassment training materials to make sure that it complies with California law and includes training on gender identity, gender expression and sexual orientation. In addition, since an employer’s compliance with Government Code Section 12950.1(a), even as amended, does not insulate the employer from liability for sexual harassment of any current or former employee or applicant, employers need to take additional steps to prevent harassment in the workplace. Such a strategy would include: (i) adopting (and communicating) a zero tolerance anti-harassment policy; and (ii) ensuring that all complaints are promptly and fully investigated by maintaining a clear internal process for investigating any complaint of harassment.

Assembly Bill 5, known as the “Opportunity to Work Act” recently cleared the California Assembly Committee on Labor and Employment by a 5 to 2 vote.

The OWA would require employers with as few as 10 employees to “offer additional hours of work to an existing non-exempt employee before hiring an additional employee or subcontractor.”The employer is required to offer the additional hours of work to any employee who – in its “reasonable judgment” – has the skills and experience to perform the work even if the employee has previously informed the employer he or she does not want additional hours or wishes to remain part time.In addition, the OWA does not specify the methodology an employer must use when offering the additional hours of work among existing employees or what happens when more than one employee expresses a desire for the additional hours.The OWA does state that the employer must use a “transparent and nondiscriminatory process” to distribute the additional hours of work, although those terms are not defined.

The OWA would also allow an employee (defined as a nonexempt employee within the State of California), to file a complaint with the Division of Labor Standards Enforcement or bring a civil action for violation of the statute.In case you were wondering, the OWA provides that any violation “shall be punished by a civil penalty” and that the court “may award reasonable attorney’s fees” if the employee prevails.Not surprisingly, the employer is not entitled to its attorney’s fees in the event it establishes it did not violate the OWA when it hired an additional worker.

Finally, the OWA requires employers to maintain documentation regarding the decision to hire any new employee or subcontractor.Specifically, for any new hire, the employer must retain documentation that “the employer offered additional hours of work to existing employees prior to hiring” the new employee/subcontractor.The OWA also requires employers to retain the work schedules of all employees although it does not specify how long the employer is to retain such records.

The OWA now advances to Assembly Appropriations where it will likely move closer to ultimate passage by the State Assembly.

On April 4, 2017, the United States Court of Appeals for the Seventh Circuit became the first federal appellate court to rule that sexual orientation discrimination is prohibited by Title VII. In Hively v. Ivy Tech Community College of Indiana, the Court ruled that sexual orientation discrimination is a form of unlawful sex discrimination against those who do not conform to traditional gender roles in their relationships.

While Hively is likely to have wide-ranging implications for many employers across the country, the impact of the decision on California employers should be quite minimal. This is because California’s Fair Employment and Housing Act (“FEHA”) has prohibited employers from discrimination or harassment on the basis of sexual orientation since 1993. California law also protects workers from discriminatory conduct on the basis of their gender (including gender identity and expression) and sex (including pregnancy, childbirth, and breastfeeding status).

California employers must take steps to ensure that their anti-discrimination policies and trainings clearly prohibit harassment and discrimination on the basis of sexual orientation, sex, gender, and all other protected categories.